Texas Gov. Greg Abbott has directed state regulators to audit pending data center projects seeking connections to the state's electric grid, a move that effectively pauses new approvals as the grid operator grapples with soaring electricity demand. The directive from Abbott targets projects requesting interconnection with the Electric Reliability Council of Texas (ERCOT).
ERCOT confirmed that the governor's directive would "effectively pause all data center projects." The grid operator stated it is reviewing Abbott's letter and will work with the Public Utility Commission of Texas to implement the governor's instructions, which includes the postponement of the Batch Zero transmission planning study.
The decision comes as Texas experiences a significant increase in electricity demand, largely driven by artificial intelligence and cloud computing facilities. According to ERCOT, approximately 90% of the 474 gigawatts of projected large-load interconnection requests currently under review originate from data centers. This volume is more than five times the state's peak electricity demand.
Abbott emphasized that protecting Texans' safety and quality of life is a top priority. The review process will involve gathering additional information from companies seeking grid connections. This includes details on whether facilities plan to generate their own electricity, their projected annual and peak electricity demand, and their water consumption and water sources.
This action follows Abbott's recent calls for tighter oversight of the rapidly expanding data center industry. Last week, he suggested that AI data centers looking to establish operations in Texas should be self-sufficient in their power generation, water reuse, and aim to lower electricity costs for residents.
Texas has become a prominent hub for data center development, partly due to substantial tax incentives. Reports indicate the state provides over $1 billion annually in tax breaks for qualifying projects. Public Utility Commission of Texas Chairman Thomas Gleeson stated that the agency is collaborating with ERCOT to fulfill Abbott's directive and ensure the requirements are met for the benefit of Texas residents.
